COVID-19 Tax and Business Update 3.25.20

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Daniel Mayo, JD, LLM,
Principal, National Tax
Services Group
Barry Horowitz, CPA, MST,
Partner, Team Leader-
State and Local Tax
James A. Bartek, CPA,
Partner, State and Local Tax
Frank Boutillette, CPA, CGMA,
Partner, Financial Services
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 Federal Updates
 State Updates
 Business Loan Assistance
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March 17th – Treasury Secretary Mnuchin announced 90-day extension to April 15th deadline and stated:
 “Just file your taxes [before the new deadline and] you will automatically not get charged interest and penalties”
 Implied a filing and payment extension
March 18th – IRS issued Notice 2020-17
 Payment extension only; no filing extension
 4/15/2020 payment date extended to 7/15/2020
 Extension includes 2019 income taxes and 2020 estimated income taxes due 4/15/2020
 Limited in the aggregate to $1M for individuals and $10M for corporations
March 20th – Secretary Mnuchin tweeted that the extension to July 15, 2020 would be a filing and payment
extension
 “At [President Trump’s] direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this
additional time to file and make payments without interest or penalties”
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March 20th – IRS issued Notice 2020-18, superseding Notice 2020-17
March 24th – IRS issued 24 Q&As relating to the Notice
(see http://www.irs.gov/coronavirus for all COVID-19 related guidance from the IRS)
 Extension applies without any dollar limits
 No need to file an extension on Forms 4868 or 7004
 What does the Notice cover?
 Type of taxpayers
• Applies to “persons” – individuals, trust, estates, C corps, S corps, and partnerships
• Taxpayers do not need to be sick, quarantined, or otherwise impacted by COVID-19 to qualify for relief under the Notice (Q&A #2)
• Tax-exempt organizations filing a Form 990-T due 4/15/2020 are covered under the Notice (Q&A #3)
• Does not apply to tax-exempt organizations like hospitals and universities that file Form 990 information returns (Q&A #10)
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 Timing and type of payments
• Applies to federal income tax payments (including self-employment) due 4/15/2020, including (i) 2019 income
taxes and (ii) 2020 estimated income taxes
• If a taxpayer files an extension by 7/15/2020, then the extension to file is valid only for an additional 3 months
to 10/15/2020 – not the usual 6 months. The taxpayer still has to pay by 7/15/2020 (Q&A #12)
• Applies to tax returns originally due in 2019 but were extended to 4/15/2020 (Q&A #4)
 For example, a taxpayer with a FY ending in 2019 and that filed a valid extension to 4/15/2020 is covered under the
Notice
• The Notice does not postpone second quarter estimated tax payments due 6/15/2020 (Q&A #16)
• If a taxpayer already filed his/her return and owes tax, interest and penalties will not accrue if payment in full is
made by 7/15/2020 (Q&A #13)
• If a taxpayer already filed his/her return and scheduled a payment of taxes for 4/15/2020, then the payment
will occur on the scheduled date unless it is canceled and rescheduled. The burden is on the taxpayer to change
the date of the payment (Q&A #14)
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 Type of tax
• Applies to income tax only
• Applies to §965 repatriation installment payments due 4/15/2020 and to base erosion and anti-abuse tax (BEAT)
payments due 4/15/2020 (Q&As #8 & 9)
• Does not apply to payroll, excise, estate, or gift taxes (Q&As #6 & 7)
 Miscellaneous
• Tax-favored contributions to IRA accounts may be made until 7/15/2020 (Q&A #17)
• Contributions to an HSA or Archer MSA can be made at any time up to 7/15/2020 (Q&A #21)
• Other IRA/workplace-based retirement account rules in Q&As #18 – 20
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 The extension helps taxpayers that owe tax, but it does not apply to refunds
 The sooner taxpayers file, the sooner they get their refund
 Refunds for the 2016 tax year also have to be filed by 4/15/2020 (Q&A #22)
 Corporate applications for quick refunds of overpayments of estimated tax (on Form 4466) also have
to be filed by 4/15/2020 (Q&A #23)
• Overpayment must be (i) at least 10% of the expected tax liability and (ii) at least $500
• The tax liability shown on the form is an estimate
• Consider planning to reduce the estimate and increase current liquidity:
• Automatic accounting method changes (accrued expenses, tangible property regs, depreciation; inventory and UNICAP,
revenue recognition, etc.)
• 2019/2020 capital loss carrybacks (3 years; Form 1139)
• Section 163(j) election for 2019 ATI
• Foreign tax elections (e.g., BEAT, FTC, FDII, etc.)
 Consider SALT and indirect taxes (sales/use tax, property tax, excise tax)
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 March 6th – Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020
 $8.3 billion aid package
• $3.1 billion for vaccines and medical supplies
• $2.2 billion for CDC and state/local response efforts
• $1.2 billion for global health programs
• $1 billion in loan subsidies to small businesses, small agricultural cooperatives, and nonprofits
• Designed to enable the SBA to provide $7 billion in loans to these entities
• Approx. $800 million for R&D
 March 13th – President declares a national emergency under the Stafford Act
• Makes funds available to states, among many other things
• Allows IRS to extend the 4/15 filing and payment deadline to 7/15 (see Notice 2020-18 and our article on the IRS’s
Q&As)
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 March 18th – Families First Coronavirus Response Act
 Key provisions
• Paid sick leave and family leave, with refundable payroll tax credits to fund them (subject to a cap)
• $1B to states for an additional 13 weeks of unemployment insurance
• Increased state Medicaid funding for medical services for the duration of the pandemic
• Grants to states to process and pay unemployment claims
• Funds for food and nutrition assistance
• Free coronavirus testing
• Liability protection for personal respiratory protective devices
• Meal program waivers – USDA can waive certain nutritional content requirements for food that is provided in group
settings
 March 24th – Labor Department issues Q&As and fact sheets (employer and employee) (not incorporated
into these slides yet)
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 Paid Sick and Family Leave Provisions
• Allows employers to keep their workers on their payrolls and to ensure that workers are not forced to choose
between their paychecks and the public health measures needed to combat the virus
 Who is impacted by the law?
• It applies to employers with less than 500 employees. The law is designed to put small- and medium-size employers
on the same footing as large employers who already provide similar paid leave to their employees
• Labor Department can exempt from the child-care leave requirement employers with less than 50 employees if the
law would jeopardize the viability of its business
• IRS promised “simple and clear criteria” for this exemption in IR-2020-57 (3/20/2020)
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 What does the law require?
• Paid Sick Leave. It requires covered employers to provide up to 2 weeks of paid sick leave for employees who are unable to work or telework
because they meet one of 6 conditions:
(i) they are subject to a quarantine or isolation order relating to COVID-19;
(ii) they have been advised by a health care provider to self-quarantine due to COVID-19;
(iii) they are experiencing symptoms of COVID-19 and seeking a medical diagnosis;
(iv) they are caring for someone who is quarantined or subject to an isolation order;
(v) they are caring for a child whose school or place of care has been closed, or the child care provider of such child son or daughter is
unavailable, due to COVID-19; or
(vi) they are experiencing any other substantially similar condition as determined by the Secretary of HHS
• What is not covered? Employee cannot work or telework due to a workplace closure
• Paid Family Leave. It requires covered employers to provide up to 10 weeks of paid family leave for employees who were employed for at least
30 days and who are unable to work or telework because they are caring for a minor child if the school or place of care for such child has been
closed, or the child care provider is unavailable, due to a public health emergency like COVID-19
• Paid Sick Leave and Paid Family Leave. Employers are prohibited from (i) requiring employees to find replacement workers to cover their time
off and (ii) discharging or discriminating against employees for requesting paid leave or for filing a complaint against the employer
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How much is required to be paid to covered employees?
Paid Sick Leave.
 The employer is required to pay sick leave at the employee’s regular pay up to $511 per day for up to 2 weeks ($5,110 max) for each
employee that takes sick leave relating to their own health (the first 3 categories above)
 The employer is required to pay sick leave at 2/3 of the employee’s regular pay up to $200 per day for up to 10 days ($2,000 max)
for each employee that takes sick leave (for the last 3 categories). This is the broader of the two sick leave requirements
Paid Family Leave. The employer is required to pay family leave for up to 10 weeks of not less than 2/3 of the employee’s
regular rate of pay based on the number of hours they were scheduled to work
 Amount is capped at $200/day ($10,000 max) and employees are limited to 12 weeks of paid leave in any calendar year
 Family leave can be unpaid for the first 2 weeks, but sick leave may cover this period
These provisions apply to full-time employees and to part-time employees, though part-time employees are eligible for
leave based on their recent work history
Employers of employees that are health care providers or emergency responders can elect out of the paid sick leave
requirement
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 When is the new law effective and when does it end?
• The law takes effect April 1, 2020
• No sick leave or family leave is required to be paid before that time
• The law expires on December 31, 2020
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 Is there a net cost to employers?
• No. The law is intended to be neutral for employers. Employer pays benefits and recovers the
cost of such leave through a refundable, dollar-for-dollar payroll tax credit (up to certain dollar
limits)
• Employer receives 100% reimbursement for paid leave and certain health insurance costs, but
the amount is includible in income (so there is no double benefit – D/NI)
• Paid leave itself is exempt from employment taxes, and if the employer continues the
employee’s health insurance coverage while he/she is out on leave, then the credit is grossed
up to cover this additional expense
• Self-employed individuals receive an equivalent credit
• No double dipping – employers cannot receive the payroll tax credits and credits under the
family and medical leave program established in the 2017 TCJA (§45S)
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 How does the payroll credit mechanism work?
• March 20th – IRS News Release (IR-2020-57)
• Reimbursement will be “quick and easy”
• Immediate dollar for dollar tax offset against payroll taxes
• Including withheld federal income taxes, employee share of SS and Medicare taxes, and employer’s share of SS
and Medicare taxes with respect to all employees
• Where a refund is owed, employers can obtain an expedited advance from the IRS by submitting a streamlined claim
form that should be released this week
• IRS has committed to processing these requests within 2 weeks or less
• Self-employed individuals will claim the credit on their income tax return and reduce estimated tax payments
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 Senate Republicans released a draft bill – Coronavirus Aid, Relief, and Economic Security
(CARES) bill
 House Democrats released a draft bill – Take Responsibility for Workers & Families Act
(over 1,400 pages)
• Concerned about providing a corporate bailout like the 2008 TARP legislation and want
accountability for the loan guarantee program, among other things
• Provides more than $2.5 trillion of aid
 Deal reached this morning on a $2 trillion aid package (CARES Act)
 Direct checks to taxpayers, emergency loans, relief to hospitals and providers, etc.
 Signed legislation expected this week
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 Businesses need to plan for a loss of revenue relating to the shut-down of the US and global economies
 Liquidity is key to staying in business, and borrowers need to prepare for future defaults and possibly
insolvency
 Businesses need to ride out the storm until the loans and other benefits of the various laws take effect
 Issues to consider:
• Many borrowers are drawing down on existing lines of credit while they are still in compliance with credit facility
covenants (e.g., financial ratios)
• Rates are so low so the cost of such borrowing is relatively inexpensive
• Material Adverse Effect clauses need to be reviewed carefully w/r/t the business, assets, operations and financial
condition of the borrower and its subsidiaries (borrowers need to avoid an Event of Default)
• Some look to forward-looking criteria which can be problematic; others are backward looking
• Credit agreements usually do not have exclusions for general economic conditions, acts of God, terrorism, etc.
• Review definitions of EBITDA to see what nonrecurring items may be excluded
• Can the borrower provide audited financial statements in light of the stay-at-home orders?
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 There has been a decrease in new M&A deals as business activity slows and valuations drop
 Valuations are adjusting to market conditions, but there are opportunistic buyers
 Buyers are facing due diligence challenges with the various state stay-in-place orders taking effect
• Buyers taking a harder look at sections 108, 382, 163(j), etc.
 As a result, deals are taking longer to close
 LOI usually are nonbinding – renegotiations likely to occur
 Renewed interest in asset deals to avoid historic liabilities
 Parties to signed deals are scrutinizing their MAC/MAE clauses and Force Majeure (i.e., impossibility) clauses
• Allows a party to terminate a deal without liability if the clause is written broadly to cover COVID-19 pandemic
• Is the clause narrow or broad? Is the list of events non-exclusive? Is there a catch-all provision?
• Who can invoke the clause – one party or both?
• Look to state law and choice of law provisions
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 §139 allows individuals to exclude from income certain assistance payments they receive (usually from their
employer)
 Does §139 apply?
 §139 applies to a federally declared disaster as defined in §165(i)(5)(A). In the COVID-19 pandemic, the
President issued an emergency declaration under §501 of the Stafford Act rather than a declaration of a
disaster under §401 of the Act
 IRS equated the two in Notices 2020-17 and 2020-18
 What does §139 cover?
• reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster, or
• reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its
contents to the extent that the need for such repair, rehabilitation, or replacement is attributable to a qualified disaster
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 What is NOT covered:
• Items reimbursed through insurance or otherwise
• Income replacement payments such as sick pay, severance, lost wages, unemployment compensation or
business income replacement
• Nonessential, luxury, or decorative items and services
 Examples of what is covered:
• Medical and funeral expenses of the family as a result of COVID-19
• Child care for workers whose normal source of child care is unavailable due to COVID-19
• Telecommuting costs such as printer, office supplies and increased utility costs as a result of COVID-19
 Documentation:
• Taxpayers are not required to account to the employer for their expenses, provided the amounts can
reasonably be expected to be commensurate with the expenses incurred
• Employers should consider a written program to administer the program fairly and to define the scope of the
program – who is covered, what is covered, amounts covered, when/how paid, claims submission process, etc.
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Employee leave donation programs
• Employer establishes a program where employees can donate unused leave time to other employees in need or to the employer
who donates money to a charity
• Enhances employee morale and camaraderie and reduces turnover
• Tax implications to the donor and donee depend on the structure of the arrangement and the reason for the need
• Donated leave is taxable to the employee who receives the leave
• Donor may receive a charitable contribution depending on the structure of the arrangement
• IRS has approved leave sharing for medical emergencies and major disasters, and for specific events, like severe hurricanes and
storms (see, e.g., Notice 2016-69, Notice 2016-55, Notice 2006-59)
Employer loans
• Bona fide loans are not taxable to employee upon receipt of funds
• Need to consider §7872 if the loan has a below-market interest rate – may be a compensatory element to the arrangement if the
interest rate is not above a threshold
• Exception for aggregate loans of $10,000 or less
• Minimum interest rate for a 5-year term loan is about 1%, for example
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 In general, meals provided on the employer’s premises are fully or partially excludable from an employee’s income
 Meals provided in employer-operated facilities generally require employees to be on the premises to be excludible
 Now that employees are working from home, employer-provided meals likely are taxable to employees
• Not likely a de minimis fringe benefit in this scenario
 Employers can always gross-up employees for the cost of meals if they choose
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 General rule is that employer-provided commuting expenses, like a car service, constitute taxable income to the
employee
 The exception is qualified transportation fringe benefits (e.g., transit passes, parking, and van pools up to a specific
monthly limit)
 Workers have already purchased parking or transit passes that will go unused
• Employers should consider advising employees of the right to suspend such programs if they expect to be unused
 From the employer’s perspective, the 2017 TCJA disallows a deduction for employees’ commuting expenditures, except
in cases where necessary for the safety of the employee. §274(l)(1)
• It is not clear whether this exception is broad enough to cover expenses related to COVID-19
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 Employees sign-up for a high deductible health plan (HDHP) because premiums are lower and they can make tax-favored
contributions to a health savings account (HSA)
 If the HDHP provides free COVID-19 testing and treatment without imposing a deductible, it could jeopardize its status
as a qualified plan
 March 11th – IRS issued Notice 2020-15
• Health plans may provide testing and treatment for COVID-19 without regard to plan deductibles without
jeopardizing their status as a high deductible health plans
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Severance payments and benefits
 Many employers are considering layoffs as a result of the economic shutdown relating to COVID-19
 Some common issues employers should consider:
• Whether to make severance payments;
• The obligation to provide continued health benefits under COBRA;
• Stopping contribution-based programs such as FSAs and qualified fringe benefits;
• Supplemental unemployment benefits; and
• Liability releases
 Consider state and federal WARN (Worker Adjustment and Retraining Notification) Acts
 Employers need to consider the tax withholding and reporting aspects of these severance
benefits
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https://www.withum.com/coronavirus-covid-19-resource-center/
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 Income Tax
 Corporation/Franchise Tax
 Sales/Use Tax
 Gross Receipts Type Taxes
 Payroll Tax
 Real/Personal Property Tax
 Transfer Tax
 And potentially numerous others
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Disclaimer: Note that state rules are changing constantly due to federal and state
legislative changes. Please check our website for the latest information.

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Income Tax
 Revised Due Date
• Personal Income Tax – July 15, 2020
• C Corporation Income Tax – July 15, 2020
 Payment Guidance
• The board is now extending the filing and payment deadline to July 15, 2020 for individuals and
businesses (i.e., S-corporations, LLCs, and partnerships) required to file 2019 tax returns, 2019 tax return
payments, 2020 1st and 2nd quarter estimate payments, 2020 LLC taxes and fees, and 2020 nonwage
withholding payments
• This applies to all calendar and fiscal year filers
• Governor Newsom provided an abatement of penalties and interest for 60 days
Sales/Use Tax
 Revised Due Date – July 15, 2020 per website
 Payment Guidance – Although payment is normally due with filing, affected taxpayers may apply online for
a filing extension as well as relief from penalties and interest
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Income Tax
• Abatement of interest and waive penalties for failure to timely pay sales and use tax due for periods
ending on February 29, 2020 and March 31, 2020, provided certain conditions are met
Sales/Use Tax
 Revised Due Date – 20th of the Month (Original Due Date)
• Abatement of interest and waive penalties for failure to timely pay sales and use tax due for periods
ending on February 29, 2020 and March 31, 2020, provided certain conditions are met
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Income Tax
• Personal Income Tax – No individual income tax
• C Corporation Income Tax – May 1, 2020 (Original Due Date)
 Payment Guidance – Contact FloridaRevenue.com for tax filing concerns due to
COVID-19
Sales/Use Tax
 Payment Guidance – Contact FloridaRevenue.com for tax filing concerns due to
COVID-19
 Reminder – The state sales tax rate on the total rent charged for renting, leasing,
letting, or granting a license to use commercial real property for rental periods
beginning on or after January 1, 2020, is decreased from 5.7% to 5.5%
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Income Tax
• The Department of Revenue will waive penalties and interest on 2019 personal income tax payments through the new
deadline of July 15, 2020. This extension applies to both final 2019 tax returns and payments, and estimated payments for the
first and second quarters of 2020
Sales/Use Tax
 Revised Due Date – Due the 20th of the month following the reporting period.
• For all registered Illinois Retailers operating eating and drinking establishments that had a total sales tax liability in calendar
year 2019 of less than $75,000 will not be charged penalties or interest on late payments of sales tax that are due for the
February, March and April 2020 reporting periods. The taxes due during this period will be paid in four monthly installments as
outlined in the Bulletin beginning on May 20th, June 22nd, July 20th, and August 20th. Taxpayers need not request relief, but
they must file the required returns. However, there is a short-term relief of penalties
• For most qualified taxpayers, IDOR will automatically waive penalties and interest. If a taxpayer receives a notice from IDOR
that imposes penalties and interest that the taxpayer believes should have qualified for a waiver, then the taxpayer can
respond to the notice indicating that he/she should have qualified for relief. IDOR will review the response and grant relief, if
appropriate
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Income Tax
• No penalties or interest for late payments will be imposed if 2019 tax payments are made by July 15, 2020
Sales/Use Tax
 Revised Due Date – June 1, 2020
• Businesses that file and pay by the extended due date will receive a waiver of penalties and interest.
• This guidance applies to all business-related tax returns
 News alert - Comptroller Franchot issued a release announcing that tax obligations that were due March 20,
2020, which was before the Comptroller announced an extension of the payment due date, may request a
refund of the tax paid in March emailing the Comptroller’s office at taxpayerrelief@marylandtaxes.gov or
calling the agency at 410-260-4020. The payments will be due by June 1, 2020
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Income Tax
• Personal Income Tax – April 15, 2020 (Original Due Date)
• C Corporation Income Tax – April 15, 2020 (Original Due Date)
• DOR may also waive penalties under certain circumstances if a taxpayer is late in paying their tax
obligation and will work with impacted taxpayers to waive such penalties
Sales/Use Tax
 Revised Due Date – For those vendors whose cumulative liability in the 12-month period ending
February 29, 2020 for returns required to be filed and for which the amount is less than $150,000, the
sales and use tax filing and payment due during the period beginning March 20, 2020 and ending May
31, 2020, inclusive, is suspended. All such returns and payments shall be due on June 20, 2020
 This suspension does not apply to marijuana retailers, marketplace facilitators or vendors selling motor
vehicles. Such vendors shall continue to file returns and make payments timely
 Payment Guidance – DOR may also waive penalties under certain circumstances if a taxpayer is late in
paying their tax obligation and will work with impacted taxpayers to waive such penalties
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Income Tax
• Personal Income Tax – April 15, 2020 (Expected to Mirror Federal)
• C Corporation Income Tax – April 15, 2020 (Expected to Mirror Federal)
• NJ DOT has not issued any guidance. Taxpayers can check for updates at https://cv.business.nj.gov.
Sales/Use Tax
 Payment Guidance – NJ DOT has not issued any guidance. Taxpayers can check for updates
at https://cv.business.nj.gov
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Income Tax
• Personal Income Tax – April 15, 2020 (Expected to Mirror Federal)
• C Corporation Income Tax – April 15, 2020 (Expected to Mirror Federal)
• If a taxpayer is unable to pay their tax bills in full, they may qualify for an installment payment agreement (IPA). Under
the agreement, they will make monthly payments toward their unpaid tax balance
• The fastest and easiest way to request an IPA is through the taxpayer’s online account. Through their account, the
taxpayer can request an IPA for a balance of $20,000 or less, and with 36 or fewer scheduled monthly payments
Sales/Use Tax
 Payment Guidance – PrompTax payments must be remitted. Quarterly and annual sales tax filers may
have penalties and interest waived if they were unable to file or pay on time due to COVID-19
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Business and Excise Taxes
• No extension as of March 24, 2020
• The New York City Department of Finance Commissioner is exercising his authority to allow for a waiver of
penalties for business and excise taxes due between March 16, 2020 and April 25, 2020
• Taxpayers may request to have the penalties waived on a late-filed extension or return, or in a separate request
• If taxpayers file an extension or return or make a tax payment in accordance with these rules, taxpayers will not
be subject to any late filing, late payment, or underpayment penalties
• For purposes of the above filings, while late filing and late payment penalties are waived, interest, where
applicable, at the appropriate underpayment rate, must be paid on all tax payments received after the original
due date calculated from the original due date to the date of payment
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Income Tax
• The Department of Revenue will also waive penalties and interest on 2019 personal income tax payments
through the new deadline of July 15, 2020. This extension applies to both final 2019 tax returns and payments,
and estimated payments for the first and second quarters of 2020
Sales/Use Tax
 Payment Guidance – The Department of Revenue is waiving penalties for businesses that are required to
make Accelerated Sales Tax (AST) prepayments by the deadline of Friday, March 20. For April sales tax
payments, the department is waiving the AST prepayment requirements and asking businesses to simply remit
the sales tax that they have collected in March
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 Remote employment arrangements as a result of COVID-19
 Employees working from home or other arrangements
• New York “Convenience of Employer” rule
• Wages considered New York sourced unless the work was performed outside New York
for “the necessity of the employer”
• Voluntary/encouraged vs. mandatory work from home?
• Other states rules may differ
 Unemployment insurance
 Monitor guidance from states
 Review employment/withholding policies
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 Audit Procedures
• Communications with auditors
• Conduct virtual meetings
• Expedite auditor review
• Statutory waivers
• Negotiations
• Payments
• Post audit review to limit over/under payments
 Continue to respond to notices timely
 Responsible persons for taxes collected (trust and other taxes)
 Potential nexus due to remote employees
 Bankruptcy issues
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 Income tax
• Consider filing positions for reduced quarterly estimated tax payments
• Statutory credit review
• Unitary/Combined group analysis and consideration
• Apportionment planning
• Refund positions
 Indirect tax
• Extensions of time to file sales/use, payroll, excise, and other taxes
• Sales/use tax refund opportunities
• Revaluation of real property and personal property
 State programs
• Voluntary Disclosure Programs
• Amnesty
• Installment agreements
 Potential new state and local incentive programs or credits
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SBA has several different financial assistance programs for small businesses
 SBA Disaster Assistance Loans for businesses impacted by COVID-19
• Economic Injury Disaster Loan (EIDL) Program
 Standard 7(a) Loan Program with amendments under the CARES bill
 Express Loan Program
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 Where SBA determines a business cannot obtain credit elsewhere
 Maximum Loan: $2,000,000 (max. amount can be waived by SBA)
 Interest Rates: 3.75% for businesses and 2.75% for nonprofit entities
 Term: up to 30 years
 During the covered period, SBA is waiving “credit elsewhere” clause as well
as collateral and personal guarantee requirements
 Loans cannot refinance long-term debt or provide working capital needed
before the disaster
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Step 1 – Apply for loan
 On-line: https://disasterloan.sba.gov/ela
 By mail
 In person
 Application documents include
• Business Loan Application (SBA Form 5)
• IRS Form 4506T completed by each business – principals owning 20% or more
• Personal financial statements
• Copies of recent federal income tax returns (or an explanation if not available)
• Schedule of monthly revenues
• Schedule of liabilities
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Step 2 – Property Verified and Loan Processing Decision Made
 SBA reviews credit before conducting inspection
 SBA will estimate the amount of the loss
 Loan officer will determine eligibility and work closely with the company through the
process
 Process takes 2 to 3 weeks
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Step 3 – Loans closed and funds disbursed
 SBA prepares Loan Closing Document (LCD) for signature
 Within 5 days of receiving the LCD back, the SBA will disburse the first round of funds -
$25,000
 Caseworker will work with the Company to meet all loan conditions and schedule out
future disbursements
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 Any business, private nonprofit or public nonprofit organization which
employs not more than 500 employees. In addition, small business concerns,
as defined by the SBA, may also be eligible
• SBA definition of small business concern varies based on total gross revenue or total
number of employees based on industry (NAICS)
 Covered period is the period between March 1, 2020 and December 31,
2020
 Maximum Loan amount
• Lesser of 4 times the average monthly payroll, mortgage payments, rent payments and
payments of any other debt obligations during the 1 year period before the date on
which the loan is made OR $10,000,000
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 Normal fees which range from 1 to 2% of the loan will be waived
 Deferral of loan payments
• During the covered period, can defer repayment up to 1 year
 Loan Forgiveness
• The amount of the loan forgiveness shall not exceed the sum of
• Total payroll costs incurred during the covered period (March 1, 2020 to June 30, 2020)
• Amount of payments made during the covered period for debt obligation incurred before the
covered period (March 1, 2020 to June 30, 2020)
 This is reduced by the percent of employees retained during the covered period to the
average number of employees during March 1, 2019 to June 30, 2019
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 Loan forgiveness (continued)
• Additional reduction for amount of any reduction in excess of 25% of compensation in
most recent quarter in which the employee who was compensated in an amount less
than $33,333 during 3/1/19 to 6/30/19 or $100,000 on an annualized basis during 2019
 The cancellation of the debt will not be includable in taxable income
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 NYC Employee Retention Grant Program
• Small businesses with fewer than 5 employees can receive a grant up to $27,000 to cover 40%
of payroll costs for 2 months
• Includes all 5 boroughs
• Demonstrate COVID-19 caused 25% decrease in revenue
• Business operational for at least 6 months
• No outstanding tax liens or legal judgments
 NYC Small Business Continuity Loan Fund
• Businesses with less than 100 employees are eligible for zero interest loan up to $75,000
• Demonstrate 25% reduction in revenue
• Demonstrate ability to repay the loan
• No outstanding tax liens or legal judgments
https://www1.nyc.gov/site/sbs/businesses/covid19-business-outreach.page
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 Microenterprise Grant - $5,000
• Businesses under $500,000
• Signed tax return
• Description of impact of COVID-19 on your business and
plan for recovery
 Small Biz Grant – up to $25,000
• Businesses with annual revenue $500,000 to $3M
• 2019 financial statements,
• verification of cash flow needs
• Proof of insurance
plan for recovery
 Small Biz Zero Interest Loan - $25,000 to
$100,000 Loan
• Businesses with annual revenue $3M to $5M
• 2019 financial statements
• verification of cash flow needs
• Proof of insurance
plan for recovery
 https://www.phila.gov/programs/philadelphia-covid-19-
small-business-relief-fund/
Philadelphia COVID-19 Small Business Relief Fund
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Florida Small Business Emergency Bridge Loan COVID-19
• Applications accepted through May 8, 2020, contingent on availability of funds
• Businesses with 2 to 100 employees
• 1 year term
• Interest free for first 12 months, then 12% until repaid
• https://floridadisaster.biz/
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Los Angeles City Small Business Emergency Microloan Program
• Business located within the City of Los Angeles
• Show historical profits and ability to repay loan
• Prove job retention
• Use of funds – job retention, reasonable and eligible working capital expenses
• Loan limits $5,000 to $20,000
• Interest rate 0% for one year or 3% – 5% for up to 5 years
• No loan fees
• https://cloud.bmisw.com/CityOfLA/Account/Login?ReturnUrl=%2FCityOfLA%2FWorkflo
w%2FEnter%2FMicroloan_Begin
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San Francisco COVID-19 Small Business Resiliency Fund
• Grants up to $10,000 for employee salaries and rent
• Businesses with 1 – 5 employees
• Demonstrate a loss of revenue of more than 25%
• Have less than $2,500,000 in gross receipts
• https://oewd.org/covid-19-small-business-resiliency-fund
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Massachusetts
 Small Business Recovery Loan Fund – up to $75,000 to MA based businesses
impacted by COVID-19
• Under 50 full time employees
• No payments for first 6 months
 Due to the availability of EIDL funds, they are no longer accepting
applications to the Small Business Recovery Loan Fund at MGCC as of
12:30pm on March 19, 2020
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 New Jersey Economic Development Authority (EDA) is empowered to make grants during
states of emergency, including the current one
 Grants can be for the planning, designing, acquiring, constructing, improving, equipping,
and furnishing of a project, also including grants for working capital and meeting payroll
requirements
 EDA is also permitted to extend business documentation submission deadlines during the
period of emergency
 EDA is currently discussing the scope of the grants/loans with the legislators and
Governor
 Application process procedures will be developed after the scope is finalized
 Additional information regarding the amounts, application process and timing of loans
will be provided once available
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 Begin preparing information necessary to apply for financial assistance
• Company formation documents
• Current tax clearance certificate (NJ EDA named as state entity)
• Filed WR30 and existing payroll at time of application
• Description of the intended use of funds and documentation to support those uses
• Such as, Copy of current lease, payroll reports, utility expenses, etc.
 If applying for a loan, you should have the following items as well:
• Financial information including three most current financial statements
• Completed/filed signed copies of most recent three years of tax returns
• YTD/interim statement that are no more than 90 days old
 Last three years of signed tax returns and personal financial statements for those with a 10% or more
ownership interest in the company
 Schedule of existing debt, if not already included in financial statements
• Mortgage, equipment financing, other term loans, etc.
 Schedule of Accounts Receivable and Accounts Payable, if applicable
 Copies of other financing commitments, if applicable
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Daniel Mayo, JD, LLM,
Principal, National Tax
Services Group
dmayo@withum.com
Barry Horowitz, CPA, MST,
Partner, Team Leader-
State and Local Tax
bhorowitz@withum.com
James A. Bartek, CPA,
Partner, State and Local
Tax
jbartek@withum.com
Frank Boutillette, CPA,
CGMA, Partner, Financial
Services
fboutillette@withum.com
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COVID-19 Tax and Business Update 3.25.20

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